Alaska—a state known for its oil and gas production—is facing a commercial shortage of natural gas supply. Pantheon Resources (PTHRF) believes it has the solution.
On Nov. 18, the London-based E&P announced plans to dig wells in a promising area of Alaska’s North Slope to help solve a vexing problem for the state—an issue severe enough for President-elect Donald Trump to weigh in.
The Alaskan government is close to deciding to move forward with the first phase of a complex plan that Pantheon hopes to take a leading role in.
In an interview with Hart Energy, Pantheon Executive Chairman David Hobbs said the company has found itself in a win-win situation with the state of Alaska. The state needs a source of gas it can afford; the company has a source it can afford to sell.
“We have deliberately gone out of our way over the last 12 months since we started talking with the state about how to use our gas to find alignment and to help the state move forward,” Hobbs said.
Cook Inlet is a large bay cutting into Alaska’s south-central region. Half of Alaska’s population is situated in the bay’s surrounding area, as well as Anchorage, the state’s largest city. In the 1960s, natural gas discovered in the bay began serving the people living in close proximity.
In the early 2000s, Cook Inlet natural gas output started to drop. From 2002 to 2024, daily production went from more than 600 MMcf/d to about 200 Mcf/d, according to a study by Wood Mackenzie. Operators have dug 34 exploratory wells in the region since 2010, with only a 9% success rate.
The supply is expected to run out around 2035. John Sims, the CEO of Alaska energy utility Enstar, has repeatedly warned the public that shortages will begin affecting the public as early as 2027. Alaska has plenty of gas, but delivering it in an economically viable way to the Cook Inlet area has been the problem.
The cheapest, most available supply has been associated gas produced with oil production on the state’s North Slope, which is about 800 miles from the Cook Inlet.
Several ideas have been put forward by some of the state’s more powerful players. Former Governor Frank Murkowski wrote an opinion piece for the Anchorage Daily News in April, pushing to convert crude pipelines from the north slope into gas pipelines and build a railroad to carry the displaced oil.
Most discussions focused on three options:
- Build a 765-mile large-diameter commercial transport line from the North Slope to the populated regions in the southern parts of the state. The natural gas not used by utilities could be liquified and sold on the international market;
- Build a small-diameter pipeline with the sole function of serving as a local gas supply; and
- Import LNG.
State officials see the commercial pipeline as the most economically viable, but building the large-scale project raised its own a three-headed monster, Hobbs said.
The commercialized project, called Alaska LNG, would require three separate major projects, each built by three different sectors of the energy industry.
The natural gas produced in the North Slope typically comes with a high amount of CO2, which would need to be stripped before the other molecules can be shipped. The project therefore requires a processing plant built for CO2.
And then, a 765-mile pipeline would be built—a massive investment for a midstream company.
On the other end of the pipeline, an LNG liquefication plant would be another billion-dollar investment that can spend more than a decade in development.
Getting all the different sectors to work in harmony has proved difficult for the project’s backers.
“They're three very different stakeholder groups, and expecting $45 billion of different stakeholders to show up in the same room at the same time and reach an agreement is probably a full-on hope,” Hobbs said.
Instead, a phased implementation of the plan has been proposed. Pantheon intends to play a key role.
The company has a 193,000-acre stake in the Ahpun and Kodiak fields on the Northern Slope. The associated gas produced in the oil play is about 0.5% CO2, low enough that it can be shipped without processing.
Hobbs said he was able to offer the state a 20-year commitment of 180 Bcf/y of natural gas for $1 to $2 less per MMBtu than what would have otherwise been available. Alaska would therefore be able to move forward with building the pipeline while the other facilities can be built later.
The project would also be a financial boost to Pantheon. The associated gas produced by the company’s operations also comes with a high amount of helium, which can be sold after at the future line’s southern terminus.
The Alaskan government has paid attention. An informational hearing about the project by the Alaskan House Resources Committee on Nov. 19 drew plenty of legislators in the audience, including Speaker of the House Cathy Tilton.
The project also drew the attention of the president-elect, who has promised to encourage the development of the U.S. energy industry.
On Nov. 8, Alaska Gov. Mike Dunleavy posted a video message from Trump on X, who said he would “ensure the gas-line project gets built to provide affordable energy to Alaska and allies all over the world.”
Hobbs said the state is considering funding options to start moving the project forward.
“From our point of view, we’ve got 1.5 billion barrels of oil in what we’ve already found, and we’re going to make a boatload of money from producing that. So we can afford to invest some of the excess value created by the gas into helping Alaska secure its long-term energy future.”
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